NTES WACC - Weighted Average Cost of Capital
The WACC of NetEase Inc (NTES) is 6.6%.
| Range | Selected | |
| Cost of equity | 5.8% - 7.6% | 6.7% |
| Tax rate | 17.9% - 19.7% | 18.8% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 5.7% - 7.5% | 6.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.42 | 0.49 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.8% | 7.6% |
| Tax rate | 17.9% | 19.7% |
| Debt/Equity ratio | 0.03 | 0.03 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 5.7% | 7.5% |
| Selected WACC | 6.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| NTES | NetEase Inc | 0.03 | 0.21 | 0.2 |
| GAME.V | Engine Media Holdings Inc | 1.22 | 0.56 | 0.28 |
| GMGI | Golden Matrix Group Inc | 0.16 | 0.23 | 0.2 |
| GRVY | Gravity Co Ltd | 0 | 0.48 | 0.48 |
| IPUB | indiePub Entertainment Inc | 2571.57 | 0 | 0 |
| MSGM | Motorsport Games Inc | 0 | -1.04 | -1.04 |
| NCTY | The9 Ltd | 0.06 | 1.42 | 1.35 |
| PLGC | Playlogic Entertainment Inc | 5.55 | 0 | 0 |
| TTWO | Take-Two Interactive Software Inc | 0.08 | 0.82 | 0.77 |
| ZNGA | Zynga Inc | 0.14 | 0.02 | 0.02 |
| Low | High | |
| Unlevered beta | 0.13 | 0.24 |
| Relevered beta | 0.13 | 0.24 |
| Adjusted relevered beta | 0.42 | 0.49 |
NTES's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for NTES:
cost_of_equity (6.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.42) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.